Executive Summary
Tesla continues to establish itself as a leader in the electronic vehicle market, especially through its innovative ventures. To have a greater say in the electronic vehicle market, Tesla has developed a strategy aimed at producing an executive luxury electronic vehicles, which maintain the company’s core values to allow the organization’s products to compete on a larger scale within the industry and beyond. As the market shift towards greater computation, we believe that our venturing in the B2B strategy would allow the company to expand its market share, generate brand loyalty, gain brand awareness, and enhance its productivity. Thus far, we believe that B2B holds greater promise with tremendous business opportunity and clear implications for growth. Since it is our responsibility to meet the needs of our stakeholders, we take it upon ourselves to raise our game to guarantee that our products and services meet and surpass the aspirations and requirements of our clients. In our favor rests the fact that B2B partakers are more probable than our consumer niches. As such, we redirect our focus on quality market intelligence while paying close attention to the needs of our target markets to remain strong and vibrant in the industry and beyond.
Tesla’s B2B Marketing Plan
Tesla, Inc. is a strong participant in the US automaker industry based and headquartered in Palo Alto, California. Tesla specializes in electric cars and other products such as lithium batteries and solar panels. Today, Tesla Motors engages in the design, development, manufacture, and sale of electric cars and other automobile power driven components. The company’s main brands include Tesla Roadster, Model S Sedan, Model 3, and Model X SUV, which are the leading high-performance electric vehicles in the market currently. In 2008, (Jones et al. 2016, p. 153) observe that the company realized a great turning point in the industry following its release of the first electric sports car, the Tesla Roadster. In 2012, the company produced an electric luxury sedan, the Model S, which energized its electric car market orientation. For a record, the Model S remains the world’s best-selling plug-in electric car which dominated the market during the fiscal years 2015 and 2016. In November 2016, Tesla’s global sales hit the 150,000unit milestone, barely four years and a half into the market. Recently, the company hatched a program to partake of the lucrative business-to-business venture to tap into the tremendous business opportunity inherent in the concept.
The Key Macro Drivers Affecting the B2B Sector in the Electric Car Industry, And Particularly In the Commercial Sector of The B2B Industry
Tesla Motors has two distinct revenue segments: development services and automotive sales. As of October 1, 2014, the company’s motorized sales accounted for 99.65 % of revenue, while development services constituted 0.35 % of revenue. Tesla operates in a highly competitive industry with major partakers posing a serious competition to the company. Tesla’s major competitors include Federal Signal, Ford Motor Company, General Motors (GM), Honda Motor Company, Navistar (NAV), Oshkosh (OSK), Spartan Motors, Tata Motors, Toyota Motor Corporation, and Wabco Motors (Tesla Inc. 2017). The company manufactures, develops, markets, and sells its automobile products and accessories through its corporate network of over 80 stores spread across Europe, North America, and Asia. For the most current full fiscal year 2016, Tesla Motors reported gross revenues of $2.50 billion in record sales. Besides, the company has a market capitalization of $31.10 billion as of 2016 and does not pay a dividend. Overall, the company has been profitable recently. However, for the most recent quarter, Tesla has recorded a loss of $0.02 per share and has for the first time realized weaker than expected sales (Tesla Inc. 2017). Tesla has also ventured heavily in its infrastructural expansion, especially through, Gigafactory, its new manufacturing plant in Reno, Nevada, among other initiatives. As part of its phenomenon market push, the company is expected to decrease the costs of its batteries installed in cars by 30 percent once the factory is operational. Such an endeavor would greatly diminish the current apprehension of the high price tag that most markets attribute to the company. With the current momentum to expand its roots, the company’s drift towards the B2B concept is timely, necessary, and appropriate. With the B2B infrastructure in place, the company anticipates that majority of its current market trepidations would greatly diminish (B2B International 2016). Through B2B marketing model, Tesla would endear itself to active sourcing, which would, in turn, give it the cash reward for productivity and competitiveness. Besides, Chesbrough (2013, p. 56) observes that the concept comes with other opportunities for looking at the market at different angles to allow the company to devise some of the most innovative and forward-thinking approach aimed at growing its revenue.
Source: Market Realist 2015
A Competitor Intelligence Analysis, Assessing both Direct and Indirect Automobile Competition in the B2B Sector
Segmentation entails dividing the potential markets or consumer niches into specific groups for closer mapping (Ellis 2010, p. 27). Market research analysts employ the concept of segmentation to offer a platform for the decision makers to maximize profitability through focusing the efforts and resources of an organization on the recognizable market segments to enhance profitability.
One of the challenging tasks that marketers often face when venturing into a new marketing concept such as B2B is segmenting the market, understanding those segments, defining their product for various segments, and building bridges to make a new concept attractive. Therefore, it is imperative to comprehend the concept of segmentation as well as positioning and targeting process to be effective (Tesla Motors 2014). In its segmentation approach, Tesla recognizes that various types of consumers may require various products or align themselves with different marketing approaches.
In Mid-2016, Tesla launched the Model 3 with an initial price of USD 35,000. The company’s former market focused on the high end, and affluent consumers, whose interest was a car that was not only eco-friendly and efficient, but also had the traits of a luxury sports utility car (Tesla Inc. 2017). Although not so affluent, Tesla’s present target audience can still afford an entry level finest luxury vehicle. The company has built on its brand loyalty through implementing various driver conscious marketing strategies such as allowing the prospective clients to book the latest car models at the cost of $1000 US refundable deposit (Tesla Motors 2014). Other targeting concepts include the leasing of Certified Pre-Owned (CPO) package which allows Tesla’s clients to return their car to the company after three years for 45-50% recompense of its initial cost (Tesla Motors 2014). Additionally, from the beginning, the company ensured to wade through the stringent automobile industry advertising strategy by applying a different concept such as providing their client’s infinite mile test warranty. Other consumer benefits included direct sales, owning its outlets, and provision of service centers which greatly helped ignite the consumer loyalty, hence productivity.
The Key Segments As Potential Targets in the B2B Market for Tesla
Amongst the most cited added advantages that the company possesses in its targeting approach is that Tesla’s brand does not necessarily inspire the clients to buy from the company, its approach to marketing provides a robust brand persuasion that leaves the consumers with virtually no option or alternative in the market (Tesla Motors 2014). Tesla’s nature is such that it allows its programs to infuse into the segments interested either in the luxury vehicles or the eco-friendly electric automobiles without having to alienate the diverse consumer niches in either segment. Notably, such an approach to segmentation offers Tesla an added advantage since it helps the company in its quests of expansion while stabilizing its market bases. As for Tesla’s showrooms, it is noteworthy that the company has one of the most appealing automobile showrooms in the car maker industry (Tesla Inc. 2017). One of Tesla’s strategies is to avail its products to virtually everyone through its strategic outlets. Unlike most car companies that locate their showrooms along the main roads or on famous parks, Tesla instead focuses their cars in shopping malls for ease of access and viewing. Such a classic positioning has been the face of Tesla’s might against other giants in the automotive industry.
Tesla pursues limitless market segments, and most of the company puts much of the responsibility on its marketers to determine the segments with the most market rewards.
Marketing Mix for 1 Segment Selected
The ‘marketing mix’ is a foundational concept whose contribution to marketing is tremendous. Scholars define the marketing mix as the blend of marketing tools, which an organization employs to pursue its business objectives in the targeted market. Thus, the concept focuses on four broad marketing domains, including product, price, promotion, and place (B2B International 2016). Tesla seeks to blend its marketing mix with the B2B marketing concept to entrench its roots in the market further and suffice as a force with which to reckon in the industry.
Product and Pricing Strategy for the Selected Segment
The company is a pioneer in electric car technology with its main product lines being Tesla Roadster, Model S Sedan, Model 3, and Model X SUV. The company’s debut in the automaker industry has left the partakers of the market gnawing with options on how to approach strip Tesla off its current market appeal (Goi 2009, p. 3). For instance, Tesla’s product impression comes from the considerations such as keyless vehicles with Wi-Fi and Bluetooth features that give the clients greater user experience. Besides, the majority of Tesla cars are super-charging stations that charge the vehicles up to 80 percent in just 40 minutes. Model S Sedan, for instance, comes with two lithium battery fittings, a 60 and an 85kwh, which when fully charged, can travel up to 500 kilometers non-stop. Additional packages include Smart Air Suspension, Hi-Tech Cabin, Superior Quality Interior, UltraSound System, and Weather Conditioning Systems (Goi 2009, p. 5). The main advantage of the Tesla’s cars compared to other brands is their low maintenance costs. The vehicles require no oil and generate no smog, hence limited breakdowns and check-ups. The majority of Tesla’s cars update their systems automatically through the wireless functionality (Tesla Motors 2014). Besides, every Tesla vehicle comes with a safety rating and eight years infinite mile warranty on drive units and battery packs.
Tesla uses one of the most market-driven pricing strategies in the automobile industry. Depending on the car model, Tesla prices begin from as low as 88.61 Euro with a 60kwh battery that offers maximum engine performance (Tesla Motors 2014). Besides, the company has a tendency of personalizing various cars to meet the aspirations of diverse consumer segments. The company offers attractive pricing and purchasing options with a possibility to give their clients loans from Tesla Corporation. However, the buyers willing to pay in cash also get a considerable discount on all products.
Promotion and communication strategy
As a new entrant in the automobile industry, the company opted for a limited marketing department with an in-house focused functionality (Tesla Motors 2014). Besides, the company does not hire third-party consultancies and other advertising agencies. Instead, Tesla recruits and employs its sales team to do the actual promotion. Additionally, Tesla’s communication strategy focuses mainly on digital channels and relies heavily on its website, social media, forums, and blogs to drive its promotional strategy (Goi 2009, p. 12). Through the website, the clients can chat with the company’s sales team and former buyers, seek information on various models, and other features related to safety, warranty, and software package. Furthermore, the company’s stores and showrooms have an additional input on branding by creating a pleasant experience while adding value to the entire purchase path attributed to Tesla.
Tesla has a robust market presence, and buyers can find its products both on online and offline mediums. Through the company’s website, clients can make requests for a test drive, seek more information, or directly purchase a car of their choice (Goi 2009, p. 6). Tesla has an expansive corporate network with more than 80 stores spread across North America, Europe, Australia, and Asia. The company situates its stores in highly visible locations, such as malls and hypermarkets, thus allowing its potential clients to easily spot its products with an ambition of having complete control over the consumer experience. Highly qualified salespeople are likely to attend to the customers to answer all their concerns and explain the paybacks of owning a Tesla machine (Goi 2009, p. 8). The company also has service centers and a team of technicians attached to every region to serve clients in various ways. All these experiences and set-ups proliferate the value Tesla deliver to its customers.
Conclusion
In essence, it is noteworthy to project that Tesla’s effort on creating a community tag around its brand is remarkable. However, while the company’s approach to the market is robust, it still lags behind in certain areas, mainly attributed to the B2B marketing concept (B2B International 2016). Unlike other marketing concepts where the system leans towards consumption and profit making, B2B delves mainly in productivity and competitiveness, and the process incorporates certain procedures such as the pursuit to maintain a viable symmetry in the market to facilitate its business to business undertakings.
References
B2B International 2016. Competitor Intelligence Research & Market Intelligence. Available from https://www.b2binternational.com/publications/competitor-intelligence/. [Accessed 12th April 2017].
Chesbrough, H 2013. Open Business Models: How to Thrive in the New Innovation Landscape. Harvard Business Press; New York, USA.
Ellis, N 2010. Business to Business Marketing: Relationships, Networks, and Strategies. OUP Oxford; London, UK.
Goi, CL 2009. ‘A review of marketing mix: 4Ps or more?’, International Journal of Marketing Studies, vol. 1, no.1, pp. 1-14.
Jones, M., Maxwell, W., Crain, E., Davis, M., Wlezein, C 2016. Texas Politics Today 2017-2018. Edition. Cengage Learning.
Kauerhof, A 2017. Tesla Motors Inc. Market Entry Strategy in Germany: A Corporate Strategy Analysis. GRIN Publishing.
Market Realist 2015. An Investor’s Guide to Tesla Motors. Available from http://marketrealist.com/2015/08/investors-guide-tesla-motors/. [Accessed 16th April 2017].
Tesla Inc. 2017. Finance Portal. Available from https://www.google.com/finance?cid=12607212. [Accessed 12th April, 2017].
Tesla Motors 2014. Marketing Mix. Available from http://jtorres2015.wixsite.com/tesla-team5/marketing-mix. [Accessed 16th April 2017].
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